Town doles out money in secret

Morrisville gives Lenovo tax breaks without public OK; law allows it

If everything goes as planned, Morrisville's commissioners will put their final stamp of approval on a plan to give Chinese computer maker Lenovo $1,050,000 in tax breaks at their public meeting tonight.

Really, though, they OK'd the deal in secret last August, months before they told a single taxpayer.

Morrisville's secrecy is allowed; North Carolina lawmakers have not given the public the right to participate in discussions on how much, if any, taxpayer money their government should offer companies in the form of economic incentives.

Although the town's commissioners had to hold a public hearing in December before they could set the deal in stone, the town staff considered it more of a "formality" than anything else, according to commission documents.

Town officials kept the deal secret for 59 days, until Gov. Mike Easley announced on Oct. 27 that Lenovo would move to Morrisville and get $14 million in incentives from the state, Wake County and the town.

It was not easy to keep the deal under wraps. At one point Town Manager John Whitson even felt compelled to suggest in an Oct. 5 e-mail message that town employees could sidestep questions about the offer by saying that they were "not aware" of any plans "that may or may not be related to this or any other potential economic development incentives proposal."

So why did the town go to such verbose extremes? Well, Lenovo wanted it that way, according to Whitson. And besides, "we certainly would not reveal our hands to our competitors who are also courting the company to their towns," he said.

Critics, meanwhile, say the practice hurts the public's confidence in government.

"It's really troubling from a public policy standpoint to have business conducted this way," said former state Supreme Court Justice Robert Orr, one of the lawyers suing to stop governments from wooing companies with tax breaks. "It gives government and government officials a black eye."

Seeking a new home

Lenovo began a behind-the-scenes campaign to get government tax breaks and grants last year, after the federal government told the company to leave IBM's Research Triangle Park campus in Durham County. Lenovo purchased IBM's computer division in May 2005 for $1.75 billion, and federal officials worried about spying by the now-Chinese company.

The company's 1,820 employees there research and design ThinkPad laptops and other computer products.

In August, the company told Durham County officials they wanted more than $14 million to stay in the county. Durham county commissioners never made an offer, so Lenovo began talking about moving over to Wake County or leaving the area for Atlanta, South Carolina or Tennessee, among other places.

As the company searched, one of its consultants told Jodi LaFreniere, the president of Morrisville's chamber of commerce, that the town could make itself more attractive to Lenovo by offering up some incentives, according to LaFreniere. She then passed the message on to Whitson, the town manager.

Whitson said he settled on $1.05 million after estimating that Lenovo could add more than $2 million to the town's coffers over four years if it brought its employees and its headquarters into Morrisville. Whitson described the package as "aggressive" without "giving away the farm."

Quiet deal is struck

The town's commissioners approved the deal in August without even knowing who would get the reward. All they knew, according to Mayor Jan Faulkner, was that the beneficiary would be a technology company with more than 1,800 well-paid employees that, among other things, would add big money to the town's tax rolls. If the company came to town, it would become Morrisville's biggest employer.

"After looking at all the details and what it would bring to Morrisville, all of us said, 'Go ahead and approve this,'" she said.

Nearly four months later, the commissioners gave the public a chance to weigh in on the deal, after it was announced by Easley and all but approved. Nobody spoke.

Still, Morrisville's leaders do not know if they overpaid to get Lenovo's jobs. North Carolina lawmakers had to contend with similar questions last year about their $242.5 million incentives package for Dell after it was revealed that some of their primary competitors in Virginia offered substantially less.

"Maybe we could have gotten away with a package that offered up $500,000," Whitson said. "I don't know, and I'll never know."